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September 26, 2009

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Henkel's future smelling sweeter

HENKEL China says its cosmetics and toiletries sector will keep double-digit growth this year, and China is expected to be its biggest market in Asia within three years.

Henkel plans to turn its focus to growing profit margins after expanding via a string of mergers in the past decades. It aims to increase adjusted earnings before interest and tax margins to 14 percent by 2012, compared with 9.1 percent in 2008.

"China has grown more robustly than the market average both before and after the financial crisis. Sales and shares in China have been increasing strongly," said Patrick Kaminski, vice president for cosmetics and toiletries in Asia Pacific.

"China is sure one of the first priorities for Henkel and the cosmetics sector because of the huge market size, the increasing penetration and the usage of cosmetics," said Kaminski. The potential of the China market is extremely huge since conditioners and other sectors are far from saturated both in lower tier cities and in major cities such as Shanghai and Beijing.

For instance, only 3 percent of people in Shanghai use deodorant compared to more than 70 percent in America, Kaminski said.

Henkel's sales in China jumped 48 percent to 4.8 billion yuan (US$703 million) in 2008 over the previous year.


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